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You’ll find that the greatest opportunity for eliminating waste in the collision repair business exists not on the shop floor but rather up front in the office. Here’s how to do it.
r eliminating waste exists not on the shop floor but rather up front in the office. This month, let’s look at the typical body shop administration processes and define how an owner, using lean practices, might go about rebuilding the whole mess.
First, let’s go through the five fundamentals of lean. Keep in mind that lean is a business strategy using very specific steps to create sustainable and beneficial change for all parties involved. Remember: Lean is how you think about and go about change, not the changes you make. The examples or actual task changes we’ll describe here are, frankly, irrelevant. What is relevant is the way we discovered what to change and how we decided the new work should be performed. You must create your own way, based on your own current conditions, for the new way to have any real benefit.
Fundamental 1: The customer must be the entire focus. Because they pay the bill, you must know what they want (what they’re willing to pay for). Any other objective is short-sighted and can’t get at the cash you want. Who is your customer and what do they want from your services?
Fundamental 2: The value in your business (answered in Fundamental 1) must be thoroughly mapped out and understood. That means you have to do a complete documentation of reality, or tell the the truth about your business. Document at a task-by-task level, in exact sequence, how your business works today – not how you say it should work or how you think it should work, but how it actually happens. In nearly all cases, the value (tasks that the customer is willing to pay for) comprises less than 5 percent of all tasks. This step guides you to exactly what you need to go and change – the 95 percent stuff.
Fundamental 3: Once Fundamentals 1 and 2 are understood, you must flow the value back to the customer. Flow means building a process that performs work (A), in the right sequence (B), in the right way (to an exact standard) (C), without reversing (D), free from any defects (E), as a complete and connected (interdependent) system. Picture a set of gears driven by each other where if one tooth breaks, the rest will feel the effect. That’s flow.
Fundamental 4: Once you have a way to flow value back to the customer, this system must be driven by letting the customer pull from the end, not by the manager pushing from the front.
This allows for three things: 1) It keeps your system from producing (building) unnecessary work at any point inside it (which will cost you money); 2) It allows you to see if you’re satisfying the customer’s needs (meeting their demands); and 3) It highlights any point where meeting the need isn’t happening well (versus covering up these constraints that need to be addressed with inventory).
Fundamental 5: Make perfection the goal, not some KPI (Key Performance Indicator) target. Unlike chasing perfection, which will force you to discover new ways to work, chasing benchmarks will only lead to discovering how other businesses already do it better. And that will lead you to nothing more than being the same as the rest and will move you closer to becoming a commodity.
Fundamental 5 is for the future. Right now, you have to build a system based on Fundamentals 1, 2 and 3. Once you have those, you will need to apply Fundamental 4 until a level of consistency exists. Know that there’s a lot to do before you can go to Fundamental 5.
Mapping It Out
That was a rehash of the basics. You can read more about these five fundamentals in previous BodyShop Business articles and in many books such as “Lean Thinking” by James Womack and “The Toyota Way” by Jeffrey Liker. But the main point is that you must know why and how first. After all, lean is a way of thinking about business, a strategy. Doing any lean things without first having a sound understanding of them will only frustrate you and potentially cause harm. The only downside to lean occurs when people don’t know what they’re doing. Like it says on the side of a can of undercoat, “For professional use only.” Know your stuff first!
To illustrate how these five fundamentals might be applied, let’s use the hypothetical (but common) example of a front-office process as the baseline. For this business, we’ll say that they’ve decided that their customer is both the owner of the vehicle and the insurance company that refers work to them through a direct-repair program. They then looked at these two customers and mapped out what things those customers wanted from their business and defined or summarized them as this:
The vehicle owner customer wants and is willing to pay (with cash) for:
• Vehicle repaired properly.
• Vehicle repaired quickly.
• Excellent treatment (courteous, informed, professional, fair).
The referring insurer customer wants and is willing to pay (with more referrals) for:
• The stuff the vehicle owner wants.
• Processing the work per their instructions (so it makes their business better).
• Keeping the costs in line.
When this business figured out what each customer wanted, they created a huge list of specific things but put them all into a couple of buckets to keep things simple (like above). Like most businesses, the customers are looking for cost-quality-speed, or cheaper-better-faster.
Fast forward to the way our imaginary business works today. The following chart shows a high-level breakdown of what the front office work looks like.
|Front-Office Work Breakdown…….||BEFORE Lean|
| 1. Customer walks in or calls in for an estimate, or a faxed assignment comes over and an estimator calls the customer.
2. A “new customer info sheet” is pulled and basic information is taken.
3. An estimator is assigned or an estimate appointment book is pulled and an estimate is scheduled.
4. An estimator meets with the customer to discuss the problem.
5. The estimator and customer review the damage.
6. The visible damage and needed (required) vehicle information is noted.
7. Images of the damage and other items are captured.
8. The customer waits as the estimate is being prepared.
9. The estimator checks the specific insurer or the shop’s own guidelines for the appraisal.
10. The database is opened and the base data/images are entered.
11. Based on the notes and guidelines, the estimate lines are entered.
12. The estimator checks for alternative parts and makes a choice.
13. The estimate is completed and reviewed with the customer.
14. Repairs and timelines are explained and issues/questions are addressed.
15. The estimator asks for the sale from the customer. If the answer is “yes,” everything moves forward. If the answer is “no,” the file is kept for follow-up.
16. The schedule is referenced with the customer and a repair date is selected.
17. The next steps are reviewed with the customer and the customer leaves.
18. The estimator completes the required file work (uploads-file folders-rentals-print documents-set up appointment-management system input and setup, etc.)
19. File/documents transferred to parts department.
20. Parts order reviewed.
21. Vendors are selected and contacted, and an initial parts order is generated.
22. Open parts orders tracking steps/process started.
23. Parts ordered and wait for arrival.
24. Open orders followed up for delivery confirmation.
25. Parts pieces begin to arrive.
26. Parts are received in building.
27. Parts are checked for accuracy.
28. Invoices are checked for accuracy and posted in the management system.
|29. Parts are stored.
30. Open order tracking continues.
31. Parts receiving process repeats two to three times until filled (steps 20-30).
32. Order status collected and reviewed with production management daily for arrival coordination.
33. Vehicle arrives.
34. Estimator called and reviews job/next steps with customer.
35. Job and file/paperwork processed for production.
36. Production gets and assigns job to technician.
37. Job enters production.
38. Tech begins repairs/reviews damage and estimate for additional supplements.
39. Additional work/parts needs discovered and documented.
40. Estimator called for processing.
41. Steps 5-32 are repeated.
42. Work continues until the tech can no longer proceed (because he needs parts or approvals).
43. Vehicle moved to storage.
44. Estimator contacts/updates insurer, customer and rental car
company to notify of delay.
45. Job production rescheduling-tracking process occurs (files, management system work).
46. Job begins again.
47. In a certain percentage of jobs, steps 5-45 occur again (multiple supplements).
48. Estimator updates customer/insurer/rental company/file/management system during repairs.
49. Job completed.
50. Estimator reviews work against current estimate for accuracy/
51. Estimator finds “misses” and works with production to correct.
52. Estimator updates file/estimate/management system to reflect
accurate, actual work.
53. Estimator processes final insurer/shop guidelines for delivery prep.
54. Estimator sets up delivery.
55. Estimator reviews repairs and paperwork with customer – delivers.
56. Estimator updates file/management systems/rental post delivery.
57. Manager/bookkeeper reviews file/ estimate/ AR and completes work.
58. Estimator closes job in various systems.
In some cases, you can run into more issues at delivery with bad customer expectations or other issues, and as a result, many steps are re-repeated. Obviously, this may not be your process or there may be many more or fewer tasks you perform as well. Also, there are clearly a lot more actual tasks that aren’t included in the above example, i.e. all the little steps in between such as getting files and supplies, answering phones, faxing things, attending meetings, dealing with system and vendor problems and performing reinspections. Nonetheless, the above example is a likely step-by-step process that might exist in a shop.
Removing the Waste
So here’s the reality part: We’re talking about a high-level administration process that looks like anywhere from 90 to 135 steps just for one job to go through this fictional shop – and that’s a lowball number. Ask yourself, how many of these things add value to the customer? How many of these things are things you could put on the final invoice that the customer would be willing to pay for? You might be able to find a percentage of customers who might be okay paying you for some of the time you spent talking to them and explaining and updating, but on average, you would be hard-pressed to find anyone like that.
As far as insurers go, there are probably several that would pay for some of this stuff with referral work, but there are a lot of tasks in this list they wish you wouldn’t do all together. It doesn’t mean you don’t have to or shouldn’t do this stuff, it just means that these things are all activities you pay a lot for that you must start finding ways to eliminate – or at least make a whole lot simpler to execute. The customer doesn’t care that you have to do this stuff, that’s your business. And that’s the whole point of the first two fundamentals. By letting your customers define the value, you now have a list of the non-value activities, or waste. Now, you must remove it.
There’s plenty more to read and understand about the seven types of waste, and I encourage you to do this. But can you place the above current “waste” process steps into these categories? I won’t do that here for the sake of space, although you should try it on your own as an exercise to open your mind to “seeing” it. Remember, this will be new to your thinking. None of us would be doing this stuff today if we saw it as waste, right? But it is. You have to train your mind to begin to see reality, and not just your mind but your staff’s, your vendors’, your partners’ and all the individuals required to build a successful customer-serving business.
Here is some of the waste:
Rework. A couple times throughout our mock task list, it says, “Repeat steps X through Y.” If you rethink things here, you could eliminate perhaps 50 to 70 percent of the tasks needed today. Where is the waste specifically?
Customer contacts. At some points in our task list, we contact the customer a couple times and discuss the same basic stuff. There is the initial contact to talk about what went wrong and how long the repair will take, and then there is some contact again at drop-off, and again with a supplement, and possibly again with supplement two, three or four, and then again at delivery. If we knew what was really wrong first, couldn’t we have cut out a bunch of this waste?
Supplements. Aren’t these just comebacks on estimates? Look at how many waste activities an inaccurate estimate drives, specifically additional customer/insurer/vendor/rental interactions. Can’t we just eliminate supplements? Why do they exist today? What’s the root cause? Well, we start by writing only what we can see. Can’t we find a way to see it all before we write anything? We also deal with bad data – part numbers, trim codes, missing parts, how to properly fix things, what can be fixed, what can’t. We also deal with bad information. This is related or isn’t, this is covered or isn’t. Can’t we fix that?
Parts orders. How many times do we order wrong parts or need more parts? Doesn’t receiving two invoices take twice as much effort as receiving one? Can’t we do this just once?
Paperwork. How many times do you write a customer’s name or phone number or RO number on a piece of paper? How many times do you have to?
Waiting. Although not much of this wasteful activity is listed above, it needs to be put in any process mapping. How much time passes in this process between the steps listed?
Arrival. How long is it between that first contact, the estimate and the vehicle arrival? How long does it need to be? Your intent was to speed up the process by writing that estimate up front so you could have all the parts there at drop-off. But how many times out of 10 does that actually happen? Maybe twice? Aren’t you making people wait longer by following this practice? Couldn’t it be considered overprocessing? Can’t you get most parts in less than 48 hours today?
Parts. Let’s say we can get parts in 48 hours. Don’t we repeat that 48-hour step with each supplement? How much better would it be if the parts vendor had no returns from you and only had to show up once at your shop to deliver just the right stuff? Couldn’t you trade this efficiency for a better discount?
Supplements. Just plug in all the above stuff. It’s not like techs can keep working around supplements (although some may believe that to be the case) – how much production is lost in the stop and start? How many times do they just fix it anyway (poorly) to keep moving on the job? Who wins there?
Overproduction. In the administration process, the biggest contributor here is scheduling.
Administrative activities and communication steps. The common tendency is to bring in a bunch of vehicles Monday and Tuesday, then less and less until none on Friday. And the inverse is true for delivery. All this extra work creates huge pockets of unnecessary work, moving these untouched cars, communicating the “untouched” status and staffing to deal with the lump of customer activity during these periods. Can’t we fix this?
You’ll find a lot more examples of waste as you go through the list, and many activities can be multiple kinds of waste. But the point here is that once these wasteful activities are identified by category, you can begin to more easily create solutions. Here are some simply, basic solutions to some of the waste:
Problem: Excess people movement.
Solution: Bring the work and tools closer to people.
Problem: Excess product movement.
Solution: Design the work so it can be completed on the first try and keep the all the work steps (pre-repair and post-repair) close to each other.
Solution: Design the work so the repair is exactly right on the first try. Build a standard right way.
Solution: Keep the relationship between the steps visible to each other so overproduction doesn’t occur. Limit the amount of work allowed in any area, and do it physically so the rule can’t be broken.
Solution: Design the standard right way to do the work, keeping the “least waste” way as the rule of thumb.
Solution: Eliminate inventory and overproduction to eliminate this kind of waste.
Solution: Keep the relationship between the steps visible to each other. Limit the amount of work allowed in any area, and do it physically so the rule can’t be broken. Most importantly, let completed work downstream signal the need for the upstream work to go again.
A New Process
Let’s apply this thinking to the new administration process for this hypothetical body shop. The new process design should look like a team of people armed with the above information (the current way, and the waste highlighted and understood). The job is to remove as much of the waste as possible today and then to put all the pieces back together so they’re connected and flow from start to finish. With that, see the following chart to see what the future state might look like.
|Front-Office Work Breakdown||AFTER Lean|
1. A customer walks in/calls/or a representative calls out (assignment).
|15. The identification process occurs and a complete, accurate and
supplement-free plan is created.
16. The identification process selects the vendor, confirms 48-hour
delivery, and orders parts and sublet work.
17. The identification process calculates the complete date based on accurate information.
18. The file is returned to the representative and the customer is
contacted to review exact repair details and the delivery date.
19. Parts arrive as per confirmation and are checked in completely against removed/identified damaged parts by the identification process.
20. Representative invoices all parts and corrects any price changes.
21. The ready job is queued up for production and repaired.
22. The customer is updated as the vehicle progresses through the
23. Repairs are completed.
24. Representative audits job against file for accuracy.
25. Representative completes administrative work and finalizes file.
26. Representative contacts customer for delivery.
27. Representative delivers vehicle to customer.
Now that’s a much simpler process, but easily doable. What’s not described here is this:
• A standard work document has been written on exactly how to do each one of these things.
• The representative has been trained on the standard.
• The work area in each step has been organized so the right tools are present and it’s located close to the other steps.
• The work area has been set up so that only the right amount of work can be handled at one time (in many cases, room for just one file, part or car).
• Visual signals have been created to show everyone what work needs to be completed now and where the work stands in the process. This isn’t hidden in a computer on filing cabinet but out where everyone can see it.
• A system has been built to show how many pieces of total standard work may and does currently exist in the business. (Something that must stay with a file once in the building, that has a limited number matching the limits set so that a new job may not come in until an existing job is complete).
Hopefully this looks a lot like 5-S activities…because it is. In this scenario, the business has built a system that eliminates large amounts of rework and waiting. Also, the amount of effort required now to produce the work has been greatly reduced, creating an increase in their capacity. This allows for a potential increase in revenue without adding resources (creating larger nets) or making greater profits by reducing resources. Most organizations would keep these resources and use them to improve other areas of the business or to help create new ones.
Other benefits from this scenario are faster-moving work, which creates greater customer satisfaction and higher quality (because the standard controls the outcome) and faster cash generation. As cash comes faster, the need for greater cashflow reserves are reduced.
The win here comes from understanding how to create your own system. The scenario described may or may not be a solution for you, but in laying out the process of building a system by using real-world and familiar activities, you might gain a better sense of how to go about building this yourself.
There are many tools available to help you start this, and most cost no more than the price of a few books, some charts, markers, cleaning supplies and paint. A good lean implementation doesn’t need to be expensive – otherwise, it wouldn’t be very lean. Also, a good lean implementation doesn’t need to be painful or cost you a lot in terms of lost revenues – otherwise, it also wouldn’t be very lean. The key is knowing the objective and doing your homework before you go tearing into anything.
Dr. W. Edwards Deming’s (who’s considered by many to be the father of modern quality control) Plan-Do-Check-Act cycle is a critical part of making improvements, but also applies to making this initial improvement of implementation. The common failure in this cycle is that most organizations go Plan-Do-Act and never bother to Check. People just start making changes because it feels like work. Do not make this mistake. Know what to do, have a solid plan, then get to the doing. Once done, you must check continually and promptly to see if the desired outcome is occurring, then take action to correct and start back at Plan A again.
|Know Your Waste|
|What might a good lean administrative process for our imaginary shop look like, and how would you go about creating it? The simple rule of thumb is to start by listing the waste steps. You must first understand what waste is. Toyota uses the seven types of waste to help the organization “see” it.
They are as follows:
• Excess people movement (traveling too far to do a task; what’s the minimum possible?)
• Excess product movement (the car, parts or paperwork traveling too far)
• Rework (having to do the whole task over, or doing the same task multiple times)
• Inventory (things built to sit around and that need someone’s attention)
• Overprocessing (doing things the complex way when a simpler way exists or can be built)
• Waiting (things just sitting that become inventory and need attention because they sit)
• Overproduction (producing more in one area than the next area can take immediately)
Contributing editor John Sweigart is a principal partner in The Body Shop @ (www.thebodyshop-at.com). Along with his business partner, Brad Sullivan, they own and operate collision repair shops inside new car dealerships, as well as consult to the industry. Sweigart has spent 21 years in the collision repair industry and has done everything from being an independent shop owner to a dealership shop manager to a store, regional and, ultimately, national director of operations for Sterling Collision Centers. Both Sweigart and Sullivan have worked closely with former manufacturing executives from Federal-Mogul, Morton Thiokol and Pratt & Whitney in understanding and implementing the principles of the Toyota Production System. You can e-mail Sweigart at [email protected]